I'm not sure where the first three months of the year went, perhaps they are still buried in Boston's snow piles. Wherever the time disappeared to, the central bankers took center stage in the first quarter and their actions dominated financial markets. The European Central Bank joined the QE party to the tune of at least 1.1 trillion Euros to be spent over the next 18 months. The Bank of Japan continues their monetary experiment of Abenomics and there is increasing speculation that they will push the dial further on stimulus which could last for the next 3+ years. Meanwhile economists in the US speculate on when the Fed will make their first rate hike. We don't expect a rate hike anytime in 2015, and maybe not even in 2016, thanks to low levels of inflation and slowing GDP growth.
With that said, let's take a look around the financial markets.
Stock indices: ECB and BoJ pump their markets to new highs
Yes the currency wars are here. Both the Euro and Yen were devalued versus the Dollar which rose 9% in the first quarter. This helped the European stock market and international markets push to new heights. Germany's DAX index was up a staggering +22% in the first quarter. In Asia, the Shanghai Composite led the charge at +17%, but was followed closely by Japan's Nikkei 225 at +11%. US markets paled in comparison as the S&P 500 barely finished in positive territory and the Dow was in the red.
| PRICE | |
| % CHG | |
| COMPANY NAME | YTD |
| VENEZUELA CARACAS | 28.2% |
| BUENOS AIRES MERVAL | 27.7% |
| PORTUGAL PSI GENERAL | 24.4% |
| FRANKFURT DAX INDEX | 22.0% |
| PARIS CAC 40 | 19.0% |
| SHANGHAI SE COMP IDX | 17.1% |
| AMSTERDAM AEX INDEX | 16.5% |
| AUSTRIAN TRADED IDX | 16.5% |
| MADRID IBEX 35 | 12.2% |
| TOKYO NIKKEI 225 AVG | 11.2% |
| RUSSIAN RTS INDEX | 11.2% |
| PHILIPPINES SE COMP | 9.3% |
| SYDNEY ALL ORDIN IDX | 7.9% |
| S KOREA COMPOSITE | 6.0% |
| HONG KONG HANG SENG | 5.3% |
| RUSSELL 2000 | 4.0% |
| NASDAQ COMPOSITE | 3.5% |
| LONDON FTSE 100 IDX | 3.2% |
| INDIA BSE 100 INDEX | 2.9% |
| SINGAPORE STRAITS TM | 2.6% |
| BRAZIL S.P. BOVESPA | 2.5% |
| MEXICO INMEX INDEX | 2.0% |
| S&P 500 | 0.4% |
| DOW JONES 30 | -0.3% |
| ATHEX COMPOSITE | -6.5% |
Commodities = Deflation
Central bankers are petrified of the risk of deflation and commodities were deflatng almost across the board. Only gasoline, silver, cattle and cotton finished in positive territory and the CRB Index finished -7.9% for the quarter. Here is the ugly picture in commodities.
| PRICE | |
| % CHG | |
| COMPANY NAME | YTD |
| UNLEADED GAS | 7.6% |
| GASOLINE UNLEAD REG | 7.6% |
| SILVER | 6.1% |
| CATTLE | 3.6% |
| COTTON | 3.5% |
| FEEDER CATTLE INDEX | 0.0% |
| CHICKEN – BROILERS A | -0.3% |
| GOLD | -1.0% |
| LME-LEAD CASH | -1.0% |
| LME-ALUMINUM | -1.8% |
| LME-SPECIAL HIGH GRD | -3.1% |
| CORN | -3.9% |
| LME-COPPER GRADE A | -4.1% |
| COPPER CATHODES | -4.3% |
| SOYBEANS | -4.8% |
| SOYBEANS OIL | -5.7% |
| COCOA | -5.9% |
| PLATINUM | -6.7% |
| CRB INDEX | -7.9% |
| HEATING OIL | -8.1% |
| PALLADIUM | -9.5% |
| CRUDE OIL | -10.6% |
| OATS | -10.9% |
| NAT GAS HENRY HUB | -12.0% |
| NATURAL GAS | -12.7% |
| WHEAT | -14.0% |
| SUGAR | -14.2% |
| LME-NICKEL CASH | -14.9% |
| SOYAMEAL USA | -16.6% |
| LUMBER | -17.1% |
| COFFEE | -19.6% |
| BALTIC EXCHANGE DRY | -23.4% |
| LME-STEEL BILLET MED | -39.2% |
US Equities by Sector
Healthcare and consumer stocks were the clear leaders in the first quarter. Biotechs were especially strong as the iShares Nasdaq Biotech ETF (IBB) finished up 13%. Utilities were surprisingly weak given that bond yields declined. Financials were also weak thanks to expectations of the Fed interest rate hike which would squeeze their net interest margins.
| PRICE | |
| % CHG | |
| COMPANY NAME | YTD |
| SPDR HEALTH CARE SEL | 6.0% |
| SPDR CONSMR DISC SEL | 4.4% |
| SPDR CONSUMER STAP | 0.5% |
| SPDR MATERIALS SELCT | 0.4% |
| SPDR TECHNOLOGY IDX | 0.2% |
| SPDR INDUSTRIAL IDX | -1.4% |
| SPDR ENERGY INDEX | -2.0% |
| SPDR FIN'L INDEX | -2.5% |
| SPDR UTILITIES INDEX | -5.9% |
S&P 500: Winners and Losers
| PRICE | ||
| Winners | TICKER | % CHG |
| SYMBOL | YTD | |
| HOSPIRA | HSP | 43.4% |
| KRAFT FOODS | KRFT | 39.0% |
| SKYWORKS SOLUTIONS | SWKS | 35.2% |
| FIRST SOLAR | FSLR | 34.1% |
| BOSTON SCIENTIFIC | BSX | 34.0% |
| URBAN OUTFITTERS | URBN | 29.9% |
| NEWFIELD EXPLORATION | NFX | 29.4% |
| VALERO ENERGY | VLO | 28.5% |
| VULCAN MATERIALS | VMC | 28.3% |
| KOHL'S | KSS | 28.2% |
| MALLINCKRODT PLC | MNK | 27.9% |
| MONSTER BEVERAGE | MNST | 27.7% |
| MARTIN MARIETTA MTLS | MLM | 26.7% |
| AVAGO TECHNOLOGIES | AVGO | 26.2% |
| AMERISOURCEBERGEN | ABC | 26.1% |
| CIGNA | CI | 25.8% |
| HARMAN INT'L IND | HAR | 25.2% |
| ELECTRONIC ARTS | EA | 25.1% |
| BIOGEN IDEC | BIIB | 24.4% |
| ENDO HEALTH SOLUTONS | ENDP | 24.4% |
| PRICE | ||
| Losers | TICKER | % CHG |
| SYMBOL | YTD | |
| SANDISK | SNDK | -35.1% |
| ENSCO PLC | ESV | -29.6% |
| RALPH LAUREN | RL | -29.0% |
| CHESAPEAKE ENERGY | CHK | -27.6% |
| DIAMOND OFFSHORE DRL | DO | -27.0% |
| MATTEL | MAT | -26.1% |
| FOSSIL GROUP | FOSL | -25.5% |
| NAT'L OILWELL VARCO | NOV | -23.7% |
| MICRON TECHNOLOGY | MU | -22.5% |
| HEWLETT-PACKARD | HPQ | -22.4% |
| SEAGATE TECHNOLOGY | STX | -21.8% |
| FMC TECHNOLOGIES | FTI | -21.0% |
| TRANSOCEAN | RIG | -20.0% |
| FREEPORT-MCMORAN | FCX | -18.9% |
| ALCOA | AA | -18.2% |
| WESTERN DIGITAL | WDC | -17.8% |
| TIFFANY & COMPANY | TIF | -17.6% |
| CONSOL ENERGY | CNX | -17.5% |
| KLA-TENCOR | KLAC | -17.1% |
| PVH CORP | PVH | -16.9% |
What are you expecting for the rest of 2015? How are you positioned?
“Janet Yellen – Caricature” by DonkeyHotey is licensed under CC BY 2.0
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